The Barcelona Process: The European Union's Partnership with the Southern Mediterranean

CRS Report for Congress
The Barcelona Process: The European Union’s
Partnership with the Southern Mediterranean
June 12, 2001
Anja Linder
Research Associate
Joshua Ruebner
Analyst in Middle East Affairs
Foreign Affairs, Defense, and Trade Division

Congressional Research Service ˜ The Library of Congress

The Barcelona Process: The European Union’s
Partnership with the Southern Mediterranean
The European Union (EU) has identified the Mediterranean (MED) region as a
key external relations priority. EU policy towards the region is governed by the
comprehensive Euro-Mediterranean Partnership Initiative, launched at the 1995
Barcelona Conference between the EU and the 12 Mediterranean partners. The
Barcelona Process entails a new, broader and more far-reaching agenda of
cooperation with the non-EU Mediterranean countries, including the creation of a
Euro-MED free trade area to be established by 2010.
The Barcelona Agreement contains three chapters of cooperation: the political
and security chapter; the economic and financial chapter; and the social, cultural and
human chapter. Many view the economic element of the agreement as the most
important one. The core of economic cooperation is the establishment of a region-
wide free trade area which will serve to enhance economic development by expanding
bilateral support and trade.
The Barcelona process is complementary to, but separate from the Middle East
peace process and as such, has managed to serve as a forum for the participating
countries, despite the ups and downs in regional relations. Since the outbreak of the
al-Aqsa Intifadah in September 2000, and the breakdown of Israeli-Syrian talks earlier
in the year, the Barcelona process is facing serious challenges and some Arab
countries chose to boycott the November 2000 Euro-Mediterranean Summit in
Marseilles, refusing to participate in a cooperative forum including Israel. The process
nevertheless remains the only multilateral forum outside the United Nations where all
the parties to the conflict meet.
Important benefits have been predicted for many of the Mediterranean
cooperation partners. The partnership is intended, for instance, to encourage foreign
investment and in the long run promote income convergence as well as political
stability and security. However, some analysts fear the potentially negative effects of
opening up to European exports on weaker and less competitive MED industries, and
the effects of the loss of government revenue which could result from significant
reductions in tariffs.
Moreover, some fear that economic liberalization tends to increase pressure on
the physical environment, as trade and investment expand. In order to avoid important
adverse effects on the environment, some advocate a supporting institutional
framework in order to take advantage of the opportunities for improvement, while
also dealing with potential threats to the environment.
This report also provides a brief discussion of how the Barcelona Process relates
to the Middle East peace process, as well as to other U.S. interests. For further
information on related issues, see CRS Issue Brief IB91137, The Middle East Peace
Talks, by Carol Migdalovitz, updated regularly, and CRS Report RL30311, Middle
East: the Multilateral Peace Talks, by Joshua Ruebner, updated August 17, 2000.

The Political Context of the Barcelona Process.........................1
Background and Motivations...................................1
The Three Components of Cooperation...............................3
Political and Security Cooperation...............................3
Economic and Financial Cooperation.............................4
Social, Cultural and Human Cooperation..........................4
Economic and Environmental Implications of the Barcelona Process.........5
Prospects and Limitations.........................................8
The Peace Process and U.S. Interests................................9
List of Tables
Table 1. Status of Euro-Mediterranean Association Agreements............5
Table 2. MEDA I Bilateral and Regional Cooperation....................7

The Barcelona Process:
The European Union’s Partnership
with the Southern Mediterranean
The Political Context of the Barcelona Process
Background and Motivations
In 1995, the European Union (EU) initiated the Barcelona Process of
cooperation with 12 southern Mediterranean non-EU member countries (MED
countries), thereby superceding previous phases of cooperation.1 The first period of
the Euro-MED relationship, 1958-79, was characterized as “an emerging
relationship,” the focus of which was the free entry of manufactured goods into
European Community (EC)2 markets. During the subsequent period from the late
1970s to the mid-1990s, most Mediterranean countries negotiated cooperation
agreements with the EC. Eventually, there was a recognition of the need to broaden
the basis of cooperation in order to tackle issues of common concern, and this led to
the development of the Barcelona Declaration. The policy objectives of the Barcelona
Declaration are to develop a common area of peace and stability, a zone of shared
prosperity, a free trade area and rapprochement between peoples and cultures.3
As compared to the EU’s previous Mediterranean policy, the “proximity policy”
launched by the Barcelona declaration is innovative in three respects. It represents a
comprehensive policy of cooperation between ‘equal’ partners with ambitious long-
term goals such as respect for human rights and democracy as well as political,
security, social, cultural and human cooperation. It furthermore introduces regional
cooperation, aimed at encouraging economic integration among the MED countries.

1The MED cooperation partners are Morocco, Algeria, Tunisia, Egypt, Jordan, Israel, the
Palestinian Authority, Lebanon, Syria, Turkey, Cyprus and Malta. It should be noted that the
individual members of the EU: France, Germany, Belgium, the Netherlands, Luxemburg,
Italy, Spain, Portugal, Greece, Denmark, the United Kingdom, Ireland, Sweden, Finland and
Austria, also have their own bilateral relationships with the MED countries, outside of the
Barcelona framework.
2 The European Community formally came into existence on the 1st of November 1993. The
Maastricht Treaty on European Union changed the name of the old European Economic
Community to the European Community and established the EC as the first pillar of the newly
created European Union.
3Evaluation of Aspects of EU Development Aid to the MED Region: Final Synthesis Report.
COWI Consulting Engineers and Planners (Denmark) in association with the Netherlands
Economic Institute (The Netherlands) and Andante (Sweden), November 1998. p. 5-8

Finally, increased funding was provided to broaden and enhance cooperation, as well
as to offer financial support for difficult reform processes.4
From the point of view of the Mediterranean partner countries, the Barcelona
process is advantageous insofar as it provides assistance in economic modernization
and liberalization. EU-MED cooperation is intended to promote reforms aimed at
modernizing economies, raising the level of economic infrastructure, promoting
private investment, and creating employment opportunities. According to one
observer, cooperation with the EU offered through the Barcelona Process is seen by
the MED countries as an opportunity to penetrate the EU market under more
favorable conditions than would otherwise have been available, specifically as the EU
now increasingly focuses its attention towards the east, in anticipation of
enlargement.5 The MED countries, furthermore, view EU-MED cooperation as a
significant chance to upgrade their economies and carry out various reforms with the
financial support of the EU. It also provides a chance to create an environment
conducive to trade and investment while strengthening political stability and regional
integration and cooperation.6 According to one economist, the MED countries
committed to the Barcelona Agreement because ultimately “it represented the best
and possibly only attractive choice for their small open economies in the rapidly7
changing world of globalization.
It should be noted that the 12 MED countries differ considerably in their levels
of advancement in the cooperation process. Turkey, Malta and Cyprus, for instance
all have candidate EU member status, and therefore also have access to EU assistance
through the pre-accession process. The other MED countries are not likely to become
members of the European Union and the Barcelona process is therefore their primary
means of cooperation with the EU.
For the EU, there are several important political and economic goals of
cooperation with the Mediterranean countries. EU countries believe it is important to
send signals to the MED partner countries that they remain important to Europe, even8
as the EU prepares for enlargement to the East. Supporting processes towards good
governance, democratization, rule of law and respect for human rights in the Southern
Mediterranean are important objectives of EU cooperation. Furthermore, controlling
immigration, drugs and crime are other important goals of common efforts. The
Barcelona agreement, moreover, recognizes the interdependence of the EU and the

4 The Euro-Mediterranean Partnership: Barcelona - a historic change and chance.
Background of the Barcelona Process. See the European Commission website at:
[ ternal_relations/med_mideast/euro_med_partnership/backg_
5 Friends of the Earth Middle East. Euro-Mediterranean Free Trade Zone: Implications for
Sustainability, Case Studies, Assessments and Recommendations. July 2000. p. 52
6 Ibid.
7 Ghesquiere, Henri. Impact of European Union Association Agreements on Mediterranean
Countries, International Monetary Fund, Middle Eastern Department, Working Paper, August
1998, p. 22
8 Friends of the Earth Middle East. p. 52

Mediterranean countries as regards the environment and the energy sector. The
partnership therefore has wider aims than traditional financial and technical support
to economic development.
The Euro-Mediterranean Partnership is currently the only multilateral forum
outside the United Nations where all the parties to the Middle East conflict meet.9 The
Barcelona Process is separate from the peace process, but designed as a
complementary instrument which will facilitate regional dialogue. One of the
instruments of this process, the Charter for Peace and Stability, elaborated by senior
officials of the 27 partners dealing with political and security matters, is aimed at
contributing to peace and stability in the region through partnership-building and
confidence-building measures and thus also give the EU a lasting political role in this
conflict area.10
The Three Components of Cooperation
The Barcelona Declaration has three main fields, or chapters of activity: the
political and security chapter, the economic and financial chapter, and the social,
cultural and human chapter. By combining all three chapters into one comprehensive
policy, the Barcelona Process acknowledges that financial, economic, cultural and
security issues cannot be effectively tackled separately.
Political and Security Cooperation
This chapter of the Barcelona Declaration consists of three parts; political
dialogue on the bilateral as well as the regional level, partnership-building measures,
and the Charter for Peace and Stability. Political and security cooperation is central
to the Euro-MED partnership, providing a new forum for conflict resolution. The
overall aim of this chapter of cooperation is to create an area of peace and stability
based on the principles of human rights and democracy.
The Barcelona Process is not an instrument for military cooperation. However,
it provides a forum for the creation of tools which will be necessary for the
construction of a future Euro-Mediterranean security regime. The preparation of such
a toolbox would represent a confidence-building effort within the Euro-MED
context.11 Furthermore, the prospect of regular meetings between signatory
governments, such as Israel and Syria, is viewed by most observers as potentially
important, if such meetings could be arranged. It is difficult, in the current context of

9 The EU’s Mediterranean and Middle East Policy: The EU and the Middle East Peace
Process; the Union’s Position and Role. See the European Commission website at:
10 Ibid.
11Tanner, Fred. “The Euro-Mediterranean Security Partnership: Prospects for Arms
Limitation and Confidence-Building.” Mediterranean Politics. Volume 5, number 1, Spring

2000. p. 201.

violence and adversarial politics in the Middle East, to imagine any credible
commitments by major players in the Arab-Israeli conflict to regional security
objectives and principles.
Examples of cooperative efforts in this context are: a foreign policy institute
network, training and information seminars for Euro-Mediterranean diplomats,
cooperation among civil protection authorities on natural and man-made disasters,
and bilateral and regional projects for promoting human rights and democracy in the
Mediterranean region.
Economic and Financial Cooperation
This chapter contains three interrelated objectives: establishing a Euro-
Mediterranean Free Trade Area (FTA); supporting economic transition and helping
MED partners meet the challenges posed by economic liberalization; and enabling an
increase in investment flows to the Mediterranean partners, through economic
liberalization and integration. The process of liberalization will essentially entail the
opening of MED markets to EU goods, as the EU already accords duty free access
to most MED manufactured goods. The process of liberalization requires the gradual
removal of all tariff and non-tariff barriers to trade in manufactured goods by 2010.
Trade in agricultural goods will be progressively liberalized through reciprocal
preferential access. For a discussion of MED agricultural exports to Europe, see
The priority sectors of economic and financial cooperation, include, among
others, industrial cooperation, holding conferences on the environment, energy and
transportation, as well as addressing the problem of scarce water resources.
Social, Cultural and Human Cooperation
The social and cultural partnership aims to “improve mutual understanding
among the peoples of the region and develop a free and flourishing civil society by
means of exchange, development of human resources, and the support of civil12
societies and social development.” It is part of a European Commission initiative to
encourage the creation of non-governmental networks linking the northern and
southern shores of the Mediterranean together as a series of confidence-building
measures. The cornerstone of such efforts is increased cooperation with civil society.
Certain MED governments have felt threatened by these attempts to activate civil
society, but the provisions built into the Barcelona Declaration and the individual
association agreements formally oblige them to accept such cooperation efforts.
Cooperation in this area includes programs for the preservation of the Euro-
Mediterranean cultural heritage, supporting projects in the fields of television, radio
and cinema, as well as bringing together youths from across the Mediterranean in
order to advance mutual understanding and cohesion.

12The Barcelona Process: Five years on 1995 - 2000. European Commission, Brussels. p. 7

Economic and Environmental Implications of the
Barcelona Process
The economic element of the agreement is viewed by many analysts as the most
important and far-reaching one. The aim is to establish a Euro-Mediterranean
Economic Area, the core of which will be a region-wide Free Trade Area covering
most industrial products.13 It aims at enhancing economic development by expanding
bilateral support and trade. The new Association Agreements set up bilateral industrial
free trade between the EU and its partner countries around the Mediterranean.
The EU-MED Association Agreements, EMAAs, an essential feature of the
implementation of the EU-MED partnership, are gradually replacing the 1970s
cooperation agreements. The EMAAs establish conditions for progressive
liberalization of trade in goods, services and capital, and are designed to prepare the
countries for the 2010 World Trade Organization (WTO) compatible free trade area
in industrial goods.14 They also provide for financial support to mitigate some of the
adverse effects of economic liberalization. Many analysts view free trade as a catalyst
that will help bring about necessary but difficult reforms in the business environment
of the MED countries. The association agreements are part of a strategy to encourage
signatories to abolish trade barriers and adopt common rules and procedures for
trading and conducting business among themselves. While the free trade agreements
prepare the ground for increased north-south trade, the biggest challenge for EU
support efforts will be to encourage south-south integration. The EU thus also
promotes the establishment of free trade agreements among MED countries.
Table 1. Status of Euro-Mediterranean Association Agreements*
ALGERIAUnder negotiation.
EGYPTNegotiations concluded in June


ISRAELNov. 1995June 2000
JORDANNov. 1997Ratified by Jordan in Sept.
1999. Not yet ratified by all EU
LEBANONUnder negotiation.
MOROCCOFeb. 1996Mar. 2000
PALESTINIANInterim Association.
AUTHORITYAgreement signed in
Feb. 1997.
SYRIAUnder negotiation.
TUNISIAJuly 1995Mar. 1998
* Cyprus, Malta and Turkey are all potential members of the European Union and signed first
generation Association Agreements, outside the Barcelona context, in 1972, 1970 and 1963
respectively. Morocco and Tunisia both signed cooperation agreements in 1976, and have since also
signed Association Agreements with the EU.Source: European Council, Agreements Office.

13 Ghesquiere. p. 5
14 Evaluation of Aspects of EU Development Aid to the MED Region: Final Synthesis Report
p. 6

Proponents of the Barcelona Process have predicted important benefits for most
of the Mediterranean countries. Improved resource allocation, harmonization of trade-
related regulations, along with increased assistance from the EU could enhance15
prosperity and employment. The agreement is also expected to encourage foreign
investment. Over the long run, it is hoped that the Euro-MED free trade area will
promote income convergence and ensure political stability and security.
On the other hand, sceptics fear that the elimination of trade barriers to European
exports will have considerable adverse effects on the weaker and less competitive
Mediterranean industries.16 Significant tariff reductions, it is also feared, will cause
considerable loss of revenue for many of the MED countries. Moreover, the failure,
thus far, to grant access to Mediterranean agricultural exports into the European
market, may dampen some of the positive effects of the agreement.
The EU offers financial support to the process of reform as countries move17
towards greater economic liberalization. MEDA is the major financial instrument for
the implementation of EU financial support to the Mediterranean region. Defined as
“financial and technical measures to accompany the reform of social and economic
structures in the Mediterranean non-member countries,” MEDA goes far beyond
traditional development aid in that it makes economic transition and free trade the
central issue of EU financial cooperation with the Mediterranean region. For the
period 1996-1999, MEDA accounted for over EUR 3.4 billion (approx. $2.9 billion)
out of the total funds of EUR 4.685 billion (approx. $4 billion)18 allocated to the
Mediterranean partners. Approximately 86 percent of MEDA funds are channeled
bilaterally to nine of the MED partners (all except Cyprus, Israel and Malta due to
their relatively high levels of GDP. Cyprus and Malta, nevertheless, are candidates for
EU membership, and as such receive bilateral aid from the EU as part of the pre-19
accession process). The other 14 percent of resources are devoted to regional
activities from which all 12 MED countries are eligible to benefit.
Over the period 1995-1999, MEDA funds went to four main types of operations:
support to structural adjustment (16%), support to economic transition and private
sector development (30%), classical development projects (40%), and regional
projects (14%). The EU is currently in the process of completing MEDA II, which
originally was to be in effect between 2000 and 2006. This process, however, has not
yet been finalized, and MEDA I has thus been extended.

15Ghesquiere p. 5
16 Mahjoub, Azzem; Zaafrane, Hafedh. “The Euro-Mediterranean Free Trade Zone: Economic
Challenges and Social Impacts on the Countries of the South and East Mediterranean.”
Mediterranean Politics. Volume 5, Number 1, Spring 2000. p. 19-21.
17 The name MEDA is not an acronym. The official name of the program is MEDA.
18 Exchange rate of May 30, 2001.
19 The EU’s Mediterranean & Middle East Policy: The Euro-Mediterranean Partnership
(Barcelona Process), The MEDA Programme. See the European Commission website at:

Table 2. MEDA I Bilateral and Regional Cooperation
A LGERIA 164 30 18.2
MOROCCO 656 127 19.4
T UNISIA 428 168 39.3
E GYPT 686 157 22.9
JORDAN 254 108 42.5
L EBANON 182 1 0.5
S YRIA 99 0 0.0
T URKEY 375 15 4.0
WEST BANK AND1115448.6
SUBTOTAL:2 95566022.3%
R EGIONAL 480 230 48%
TOTAL3 43589026%
* The low levels of disbursement are explained by various factors such as the domestic political
situation in the case of Algeria, or restrictions imposed by the European Parliament due to the
human rights situation in Turkey. Source: Report from the Commission: Annual Report of the MEDA
Programme 1999, Brussels Dec. 12, 2000, p. 8.
Economic liberalization and integration into the global economy will entail a
significant burden on local economies. For instance, the EU-Tunisia Association
Agreement calls for the modernization of some 4,000 Tunisian industries. By 2000,
1,624 firms had applied for funds to modernize, 860 of the applications had been
accepted, and it was estimated that the cost of modernization would amount to $1.2
billion.20 Such modernization efforts represent one example of MEDA funded
Agriculture is an important sector, both socially and economically, for many
countries around the Southern Mediterranean, employing large segments of the
population and generating much needed foreign currency.21 The EU’s Common
Agricultural Policy (CAP) makes the extension of cooperation into this area

20 al-Hayat, March 1, 2001.
21 Friends of the Earth Middle East. p. 2

complicated. The EU-MED partnership calls for progressive liberalization of
agricultural trade, but stops short of calling for complete free trade as it does in the
case of manufactured goods. Limits have been imposed so as to ensure MED crops
do not compete with European production, thus forcing farmers who wish to profit
from the EU market to choose crops which may not be appropriate to the region.
Such crops normally demand intensive applications of inputs e.g. water and agro-
chemicals and/or farming marginal lands, which may have negative environmental
effects in the long run.
Analysts have pointed to potential positive and negative effects on the
environment as a result of the Barcelona Process. Trade liberalization is viewed by
many analysts as a factor that encourages urbanization, which will further heighten
pressure on already burdened urban environments in the MED region.22 Moreover,
industrial and agricultural activity could intensify, as foreign investment increases and
the MED economies focus increasingly on export promotion. Furthermore, as these
countries open up to increased trade and remove customs duties, the funds available
to various governments will be reduced, potentially limiting their ability to address
social and environmental issues at a time when pressures and needs are mounting.23
There are, nevertheless, some potential positive ecological outcomes. The
availability of more advanced technology and the removal of certain subsidies may
lead to enhanced efficiency and less pollution. Environmental niche markets, such as
organic crops, may bring potential gains both for trade and the environment.24
Increased economic activity could boost tax revenues and give governments enhanced
capabilities for dealing with environmental programs. In order to take advantage of
the opportunities for improvement, however, some advocate the establishment of
supporting institutions and policies, backed with sufficient authority and finances. The
EU has a Directorate-General dealing with environmental issues and NAFTA has a
relevant set of institutions.25 This sort of supporting institutional framework has yet
to be established in the context of the EU-MED cooperation process.
Prospects and Limitations
The process of liberalization will essentially entail the opening of MED markets
to EU goods, as the EU already accords duty free access to most MED manufactured
goods. The EU therefore stands to gain from such increased access to MED markets,
while the Mediterranean partner countries have an opportunity to attract European
technology and investment, as well as increased financial assistance through various
programs intended to mitigate the negative effects of economic liberalization.
Nevertheless, thus far not many European businesses have shown great interest in the
opening MED region and in the opportunities offered by the Euro-MED Partnership.

22 Ibid.
23 Ibid. p. 1
24 Ibid. p. 73
25 Ibid p. 1

The benefits for the Mediterranean countries of cooperation with the EU have,
so far, been limited, although Morocco and Tunisia are exceptions. The growth of
their garment industries, and intensive sub-contracting in that sector, would not have
been possible without the advantageous conditions of access to the European market
offered from 1978, with the entry into force of cooperation agreements. Industrial
development and trade in manufactured products nevertheless remained essentially
limited to this sector.26 The rest of the region has thus far remained largely
unresponsive to the opportunities to sell in the European market.
Many see the participatory partnership approach of the Barcelona process is a
strength in that it brings many diverse nations into cooperation. But others worry that
it creates enthusiasm and expectations which, if not met, might lead to disappointment
and loss of confidence. The diversity of the MED countries and the political tensions
between some of them already has posed, and will continue to pose, problems and
slow down the process of cooperation. Furthermore, the long-term success and
sustain ability of the partnership will hinge on the establishment of durable peace and
stability in the region.
The Euro-Mediterranean Partnership has also given new impetus to the idea of
intra-Arab free trade. This would comprise a major step towards a true free trade area
around the Mediterranean, with intra-MED as well as EU-MED free trade, as
opposed to a hub-and-spokes system of trade only between the EU and individual
MED countries. Many observers believe that the domestic markets of individual MED
countries are too small to draw substantial interest from the international business
community. In order to attract larger shares of foreign direct investment, they
maintain that the MED countries have to be perceived as part of one big market
where it is possible to invest and trade without restrictions.27 The Barcelona Process
can thus offer important financial and technical support for the process of regional
integration as well.
The Peace Process and U.S. Interests
The Barcelona process is complementary to, but separate from the Middle East
peace process and as such, has managed to serve as a forum for the partners to meet
despite the ups and downs in regional relations.28 Following the outbreak of the al-
Aqsa Intifadah in September 2000, and the breakdown of Israeli-Syrian talks earlier
in the year, the Barcelona process is facing serious challenges and some Arab
countries chose to boycott the November 2000 Euro-MED Summit in Marseilles,
refusing to participate in a cooperative forum with Israel.

26Rhein, Eberhardt. “Euro-MED Free Trade Area for 2010: Whom Will it Benefit?” The
Journal of North African Studies. Volume 3, Number 2, Summer 1998. p. 4
27 Joffé, George. “Perspectives on Development: The Euro-Mediterranean Partnership.” The
Journal of North African Studies. Volume3, number 2, Summer 1998. p. 13
28 Dalak, Eva. “Focus on Europe: The European Union and the Middle East.” Bulletin of
Regional Cooperation in the Middle East published by Search for a Common Ground in the
Middle East. Volume 8, number 4, Winter 2000/2001. p. 14

The Barcelona Process signals that Europe seems to want to take on a bigger
role in the advancement of the peace process. While some observers view the United
States as wary of Europe’s perceived bias towards the Arab countries, the Europeans,
according to some analysts, are critical of what they see as an American tendency to
support Israeli positions. The EU nevertheless recognizes that it cannot replace the
United States as the prime peace promoter, which was explicitly acknowledged in the
final statement of the Marseilles summit in November 2000.29 The Union maintains
that it strives to complement the American position on Middle East peace, rather than
compete with it, according to the statement. The EU presents itself as a ‘facilitator of
regional dialogue’ through the Euro-Mediterranean Partnership. According to the
European Commission, “one of the successes of the Euro-Mediterranean Partnership
is to have allowed, against a tense background, dialogue to be pursued between
Mediterranean Partners involved in the [Middle East peace process] in a context of
regional meetings on all questions of common interest. The Partnership still remains
the only multilateral forum outside the United Nations where all the conflict parties30
Despite the positive effects of the Barcelona Process, some might feel that it is
competing with American interests. However, no such concerns have recently been
voiced by U.S. officials.

29 Conclusions formelles de la Présidence, Quatrième conférence Euro-Méditerranéenne des
Ministres des Affaires Etrangères, Marseilles, France, 15 - 16 November, 2000.
30 The EU’s Mediterranean & Middle East Policy: The EU and the Middle East Peace
Process; the Union’s Position and Role. See the European Commission website at: